Most Americans are getting a failing grade in financial literacy especially revolving around retirement. Victor and Mark share the top topics people are struggling with so you can understand!
Then, Baby Boomers are often the talk of this show. But what about Generation X? Being the next generation in line for retirement, what should they be doing to prepare?
Finally, the show wraps up with a little segment called Man (or Woman 😉 ) on the Street! Victor answers questions directly from people on the street.
Are You Paying Too Much In Taxes In Retirement? Click here
Make It Last with Victor Medina is hosted by Victor J. Medina, an estate planning and Certified Elder Law Attorney (CELA) and Certified Financial Planner professional (CFP). Through his law firm and independent registered investment advisory company, Victor provides 360º Wealth Protection Strategies for individuals in or nearing retirement.
For more information, visit Medina Law Group or Palante Wealth Advisors.
Full Transcription Below
Mark Elliot: Welcome to “Make It Last,” with Victor Medina, Medina Law Group and Palante Wealth. I’m Mark Elliot.
Victor and his teams focus on traditional estate planning, asset protection, retirement distribution, proactive income tax planning. He’s been featured on national television, “The Wall Street Journal,” “The Huffington Post,” “U.S. News & World Report.”
Here’s the deal, if you have any question about anything that we talk about today on the program, you’d like to learn more about it, “Wow. I didn’t know that. I would like to learn more.” You can always call the team 856‑506‑8300.
You’re kind of in that timeline of 5 to 10 years out from retirement, and you’re like, “Boy, there’s a lot of moving parts here. I don’t know what my income plan is. Where’s my income coming from. What about my investment strategy? Should I be tweaking that a little bit?
“What about taxes, Taxes go up. What should I be doing? How do I plan for that? What about estate planning? How do I put all this together?” That’s what Victor’s teams are here to help you with 856‑506‑8300.
Today, we’re going to talk a little bit out of the gate about financial literacy. It’s not a surprising thing to me, Victor. Now, you said your parents were teachers. Correct?
Victor Medina: Correct.
Mark: Any of them teach math? Either one of them?
Victor: Neither of them.
Mark: My dad was a math teacher, and I don’t really like math. My mom was an English teacher, and I did spend one year teaching seventh and eighth grade English. Then, my elective that I taught was a history class, like Zachary Taylor was so short, he had to be helped on his horse.
William Taft was the first president with electricity, and I believe the bathtub in the White House. I think he even threw out the first pitch in a major league game. It was a fun‑filled show, or fun‑filled class, if you will.
I’m not surprised that most Americans get a failing grade when it comes to retirement literacy, and this is according to the American College of Financial Services. They did a test ‑‑ it was a 38 question quiz. 89 percent of female participants flunked, 72 percent of men failed the quiz.
I think the challenges in school, and I had a business math class or something, I had general math class or whatever. I wasn’t the calculus person so I didn’t go into the deep, deep math classes. To me, Victor, the things that you talk about on the show about the importance of…
You’re a math‑based company, not an emotion‑based company, but you do realize we all have emotions. It seems to me that our education system doesn’t teach some of these basic things that we need to know, especially during our working years.
Maybe even more importantly when we’re on that fixed income in retirement. It seems like we’re messing up here. Maybe you should teach a class around the country about this.
Victor: It sounds good, I’ll get right to that when I’m not working with my clients. It’s not at all surprising. I totally agree with you that, we’re failing, and we’re failing at an early age.
I’ve got the three boys. The oldest is working now. Aiden’s got a job as a lifeguard. I feel like it’s a personal success, he comes home and he decides that he wants to spend what are in the tens and the ones column, and he wants to give me to invest and save what’s in the hundreds columns from every paycheck. I think that’s super unusual.
Among his friends, he’s a complete pariah for not wanting to spend every dollar that he has. It’s not universal, but it’s certainly enough to the point where it’s unusual for people to have some sense of financial literacy.
The only reason I think that he might be more advanced is, because he’s got a dad that works in that area and has explained the concepts of compound interest. What happens when you start as early as he’s starting with what he’s saving, and just kind of dollar‑cost averaging into it.
Yeah, we’re failing them. We’re failing a lot of them. I want to kind of keen on another part that you talked about, Mark, which is this higher percentage of women that are failing. We’ve got this incredible focus in our office and our planning around making sure that we help empower women in retirement. In fact, that’s the name of one of the books that I’ve written.
What will happen is we’ll visit with women that are suddenly in charge of money, either because of the divorce or they’ve been widowed or something along that. They just weren’t familiar with it in the past. Just in the division of labor, it wasn’t something that they were in charge of.
They’re in a position where they really feel lost as to making smart decisions along the way. What’s interesting about that is women typically have a more conservative outlook about what they want that money to do, meant to be a little bit more aggressive. It’s not universal, but it is enough for us to say that this is generally the way that it happens.
The reason why that’s important is that the majority of the information that’s out there doesn’t help them make decisions, and conform it with what they want. In other words, you’re dealing with these kind of like just fly‑by‑the‑seat‑of‑our‑pants stock jockey, folks that are going to talk about how much they’re going to grow, and be swinging for the fences.
That might speak to the men that they want to speak with, but it really doesn’t help the women that are really trying to make sure that they have safety and security in what they’re doing. That’s actually where a retirement specialist like us can help because that’s our frame and our focus, is making sure that we protect it and help make it last.
In addition to that, because we’ve written this book, I think what I want to do Mark is, I want to be able to give that a way to folks. If you are interested, you should give a call to the number 856‑506‑8300. This is just for the women out there. I don’t want any men posing as women for just to get the copy of the free book.
If you’re a woman that wants to learn more about it, I want to do you a service, and go ahead and gift you a copy of the book. All you have to do is call the number 856‑506‑8300, and let us know you’d like a copy of the book, “Make It Last ‑‑ Empowering Women in Retirement.”
We’ve got that available for you to be it to get sent out. It’d our pleasure to go and do that. We really want to help that. The whole story around that book, Mark, is that my mom faced a sudden bankruptcy when she got divorced. It was really because she wasn’t in a position to be able to manage her own money.
Because of that, I’ve seen it as almost a calling of mine to really help empower and respect all the women that make all these contributions to make sure they’ve got the information to make great decisions as they go out through life.
Mark: Yeah, I like that. Make It Last ‑‑ Empowering Women, one of Victor’s Make It Last series. He’s got five different books in that series. 856‑506‑8300, just ask for it. Say, “Hey, Victor said I could get a copy. I need a little guidance here. I would love to read this book, and learn more about some of the challenges that might I be facing.” 856‑506‑8300.
Do you think about, are there any certain topics, Victor, that you find most people struggle a little bit with when they come in for that first sit‑down chat with you and your team, when it comes to retirement? Are there any topics that stand out ahead of others, that are a little bit more challenging to wrap our brain around?
Victor: I think there are. It really in focusing around taxes. Most people who have addressed the concept of taxes have done in a reactionary, responsive manner. Meaning that they got to the end of the year, they prepare their taxes, and they paid for whatever they needed to pay in April.
When we start talking to people about tax planning and retirement, we’re actually doing it from the other vantage point, which is what can we do proactively before the tax bill comes to take advantage of tax planning opportunities that you will help expand the money that you have, reduced total number of taxes in there?
The reason why that is, ends up being something that a lot of people struggle with is first of all, the conventional wisdom is pay the least amount of taxes as you can, no matter what. We actually expand this to say, “Pay the least amount of taxes overall, that you can in that situation.”
When we start to do that, since that maybe that means that sometimes we’re paying a little bit higher taxes now as part of our planning, because it means lower taxes overall, that starts to be a new concept that they haven’t heard. It’s not out there in the world.
Then the other element of that, that ends up being a challenge is that we actually have to project where that number is going to be in future. For people, they’re very presently focused. It’s this year with this taxes.
We’re having them expand their thinking to tax rates beyond the year 2025. Tax rates that your children will be paying versus the ones that you’ll be paying. We help expand their vision off of it. It usually takes some education to get their mind wrapped around that.
Mark: Let’s finish talking about situations, whether you have a couple that comes in, and you have topics that you’re going to chat with them about, or you have an individual come in and talk about their retirement. It could be male or female, obviously an individual.
We do know that 80 percent of men die married, which means their spouse is there to take care for them at the end, and 80 percent of women die widowed, divorced or single, so who’s helping them? It’s a moving challenge, I think, for all of us.
Talk about the conversations you have about a surviving spouse because I always say that. One of the things I always say is, “Are my loved ones going to be OK if something happens to me?” There are some moving parts to this area that not everybody’s aware of, besides the emotional. Besides the emotional.
Victor: Exactly, way beyond the loss, obviously, that’s in there. It’s significant. By the way, that loss often comes with people being in a vulnerable position, if they’re not already working with a firm like ours that has got this as part of their planning, because they can sometimes make some bad decisions in their grief.
I think that there are three things that come up when we have the surviving spouse question that need to get factored into all of this. The first is that the income changes. If you’re relaying on two Social Securities as part of yours fixed income, you’ve got to recognize that when one spouse dies, we lose the lower amount of that Social Security.
We keep the higher one. We do lose one of them, which means we lose one of the guaranteed sources of income in retirement. We have to plan to make that up in some other fashion because the guaranteed nature of income is where we get our place of mind and security, the way that we manufacture that paycheck.
That switch, that change over that typically happens is something that needs to be planned for. The second thing that occurs is that your filing status changes from married to single. I know that sounds cute, simplistic and flippant, but what happens as a consequence is that the way that you pay taxes, increases.
There’s these little brackets that apply to tax rates, and the brackets are one size when you’re married and then half that size when you’re filing single.
All of a sudden, what’s happening is, more of your money is going to the federal government in income taxes because you’ve just checked the box that says filing single ‑‑ because you have to ‑‑ instead of the one that is filing married, and making sure that we account for the higher taxes or preplanned for that, is another element of planning for that surviving spouse.
Then the last element you alluded to, when you were talking about what would happen with women outliving men, and who cares for them, it is a long‑term care question.
When we have two married people, when they would have been married couple in there and one of them gets sick, what happens most of the time is that one of the spouses care for the other person. When we left out to the other spouse, we don’t have that same built‑in caregiver, which means that we have to go and pay for that caregiving in some fashion.
Most people these days are not lucky enough to be living next door to their daughter or son who’s going to take care of them or let them move in, which means that we have to budget for something like an assisted living, or a facility, or a home healthcare aide, or ways of providing for that long‑term care need from the resources that we have, not the free labor that was our spouse.
Those three areas are crucial to do planning ahead of time because in a crisis moment, it’s not as easy to go ahead and plan for the loss of some of the income, the higher taxes that may need to be paid, and the provision of long‑term care.
Those three things can absolutely be handled in a Make It Last plan that we create for our clients for retirement planning, but it’s best done if you do it ahead of time before you suffer that loss.
Mark: Be proactive, not reactive. 856‑506‑8300. A lot of moving parts when you lose a spouse, let alone the emotional trauma of that situation. 856‑506‑8300. Let’s finish with single folks because you don’t always sit down with married couples. You help individuals male or female, single, widowed, divorced, what have you.
What about their retirement planning? There’s probably some different questions we’re looking at here.
Victor: There are some different questions. Some of them are what I mentioned when we talked about a single spouse about taxes being higher and needing to provide for long‑term care. Some things that are part of a single planning, somebody who comes in as a single planner, not something that we have to account for the loss of a spouse.
One of them is in the legal realm, Mark. What we have to do is think about different kinds of legal planning documents.
Here, I’ll just take a second, kinds of powers of attorney. Most of the time when we draft powers of attorney for a married couple, we make them immediately effective so that when somebody becomes disabled, there’s no test and we can then use that power of attorney.
It’s almost like giving somebody a blank check to walk around in your shoes, and do whatever you want. When you’ve got a married couple, that’s totally OK. When you’re a single individual, it’s a different consideration.
We may need a different legal planning tool called “the springing power of attorney” that’s only effective when you become disabled or incapacitated. That’s a special consideration for a single person, because if they’ve got kids, maybe there’ll be the agents, but they don’t want them walking around with a blank check to life.
If they don’t have kids, then they may be relying on a friend, or niece, or somebody that’s a relative is a little bit more extended away from them, so the right kind of legal planning tool is helpful for them.
The other element of that is looking and planning around different kinds of investments for longevity. We’ve got a different investment horizon for what’s going on with a single individual. That gets layered in as well.
Those two things, different legal planning tools, and also different investment strategy for a single person over a married couple. Then if you’re interested in making sure that you actually get a lot more detailed information, married or single, we have an upcoming seminar that’s open to the public.
We’re going to provide some food for you at Seasons 52 on July 29 or August 5, a lunch or a dinner. Based on your schedule, there’s going to be two Thursdays, and if you’d like to learn more about that, you can give a call to 856‑506‑8300. That’s 856‑506‑8300.
Mention the upcoming seminar on July 29 or August 5. If we’ve got space we’ll register for that, but that’d be a great way for you to spend a little bit more time getting more detailed information about how you can create a plan for yourself whether you’re married or single.
Mark: Glad you’re with us today for Make It Last with Victor Medina, the Medina Law Group, and Palante Wealth. You can find out more about the Medina Law Group. If you got questions about, maybe you need a certified elder law attorney. Victor and the team, they can help you with that certainly.
You think about estate planning and legacy planning, and all the moving parts, and boy, they’re talking about changing some of the estate tax things and all these kinds of things, a lot of moving parts here. The Medina Law Group can certainly help you in that area.
It’s medinalawgroup.com. If you’d like to find out more, M‑E‑D‑I‑N‑A, medinalawgroup.com. Then in Victor’s other company, Palante Wealth, that’s the holistic planning side for your retirement, the investment strategies, income, taxes.
How do we plan for all of that? What if we do need long‑term care? We have a health issue, how does that all play into this? That is palantewealth.com. To find out more, P‑A‑L‑A ‑N‑T‑E, palantewealth.com.
Glad you’re with us today. Victor, would you say it’s fair to say…and we’ve done this show now for several months. You think about it, we typically are talking baby boomers. Would that be fair to say?
Victor: Absolutely. Since it’s the year 2015 or 2016, there was 10,000 of them turning 65 every day for the next 30 years. It’s been our main focus.
Mark: Yeah, so you think about it. That’s the generation retiring right now. There was the greatest generation from 1901 to 1927, the silent generation 1928 to 1945, the baby boomers, and I’m in that category, 1946 to 1964, is when you were born. I was born in ’59. That means everybody that born in 1959, in the year 2021, will be Social Security eligible, turning 62 in 2021.
Here’s a stat about this. Think about this, all the baby boomers, the youngest baby boomers, by the year 2030, will all be at least 65 years of age. That means what generation is next when it comes to retirement planning. That is probably your generation.
Victor: That’s mine. I was going to say, Generation X. We’re always the forgotten one.
Mark: Absolutely. 1965 to 1980. That is Gen X. When you think about all the moving parts before we get in because we’re going to spend the next couple segments talking about Generation X. What should you be doing as you get ready?
You think about it, born in 1965 to 1980, which means the oldest are turning 56 this year, the youngest will be turning 41 this year. The age bracket of Generation X is basically 40 to 56 years of age.
We’re going to talk. That means you’re right on deck. Your retirement is coming faster than maybe then you even realized. You think about all of the baby boomers that went off into retirement and rode off into the sunset.
The number was something like a million and a half, and don’t hold me to the numbers, they’re ballpark. About a million and a half baby boomers retired in 2019, but over three million retired or left the workforce in 2020.
Those kinds of challenges…Those aren’t the reasons where we see companies and small businesses needing employees, I don’t think, but when you lose that many people from the workforce, what does that do to our economy?
Victor: That’s a big one, because first of all those folks that were on the retirement age were the people that were typically the most highly skilled of the workers. They’re leaving a void if it hasn’t been properly filled, and so you look at what the impact on the economy is going to be.
I think it’s twofold. There’s one positive, and there’s one negative. The one that’s negative is we’ve had this skills drain that’s occurred is one of these people have gotten retired.
The pandemic probably caused a few more than average to make an earlier decision, saying, “I’m just not going back.” I had a client of mine that was in education, and just realized when it happened in March. “That’s it, I’m done. I’m not going back in September.”
It was completely unplanned. There is that effect off of it. The positive effect that’s in there is that we get the opportunity to have innovation and new thinking draw and push things in a new direction. It’s probably stuff that wasn’t as anticipated before.
It’s not to say that, we can just group all these people by age, and label them with one thought over another.
We see all of these advances in more technologically‑based solutions for stuff. Whether we’re talking about electric vehicles or looking at what’s going on with different services that can be provided, or how people going to work remotely.
Those kinds of innovations are coming from people that are challenging the status quo that may have been in the workforce, expecting things to stay the same for a long time.
What’s important about that, from a retirement planning perspective, regardless of what generation you’re in, is that you really have to have a forward‑thinking plan that doesn’t rely on the same old, same old being there forever.
The same cautionary tale about relying on the biggest blue chips of stocks to be there forever is going to be the same as we watched the changeover occur because the baby boomers were the biggest of the generations that were making this transition.
We’re going to see the biggest effect occur as these people get out of the workforce, just by growing older.
Mark: Yeah, it certainly puts more stress on Social Security, Medicare, and those government programs, certainly with so many baby boomers, 10,000 of them turning 65 every day.
Basically, who knows how many are retiring every single day? Now we’re going to focus on Generation X, Victor’s generation. Victor, I’m going to have you speak for your generation because we know they’re all the same. That’s not true about any generation. Is it?
Think about this, you’re 40 at the youngest edge of the Generation X, born in 1980. You’re going to be either turning 41 this year, you’ve already done it or you will be. Then the oldest are 55, turning 56 this year.
You think about that. That means the oldest Generation Xers are getting close to retirement. Maybe it snuck up on them a little bit.
Are you sitting down with more of Generation X people, pre‑retirees, now, than certainly you were five years ago, obviously, I would think, but are you seeing more Generation X come in to talk about retirement?
Victor: We are, and it’s actually happening in two different ways, Mark. I think the first way it’s happening is that we have been dealing with ostensibly, what are their parents, having already retired, understanding the smart decisions that we’ve helped their parents make a bit getting into a really sound retirement plan.
Because of that, wanting to have a conversation a little bit earlier, maybe, then even they anticipated. It may not be that they’re looking at retirement, per se, but they know that good retirement planning starts early. Because we’ve been helping their parents, their parents will make a referral over, and they’ll want us to meet with us and we’ll start to talk with us.
So that’s one way that we’ve been able to see more Gen X people. The other thing that is also true is that Generation X, basically people that are 56ish or so, 41, in that range, in that 15‑year range, are looking at retirement as something that they have to grab by the horns, that is not going to be planned for them.
There’s enough information going out there, especially because of the vast number of baby boomers retiring, and all of the things that you’ve mentioned about the stress, potentially in Social Security, and this idea that they know, having been in the workforce now for almost 20 years, that there is no magic pension waiting for them at the end, that they’ve got to do some preplanning on this.
They’ve got to go ahead and really understand what it is that’s going to happen for them in the retirement. If you’re in the Generation X, you’re probably thinking about, “How am I going to be OK once I get into retirement? Maybe I need to start thinking about this beforehand. It’s no longer just something that I can kinda ignore towards the end.”
There’s definitely been enough information shared with you to know that the sooner you start thinking about this, the sooner you start doing some savings, start with some smarter investing, the better off you’re going to be at the end. You’ve got to take control of it on your own.
I’m really seeing it from both ends. I’m seeing it, just the natural outgrow of our clients having their kids come and see us, and also, I think, just this raising of awareness amongst people who say it’s not something that you can avoid, it’s actually coming around the corner.
Even at my age at 46, and to the youngest of Generation X, 41, you can’t help but see that big oncoming train, that you just can’t avoid, being that you have to plan for your own retirement if you’re going to want to have a chance at being successful at it.
Mark: If you think about it, if you’re going to sit down and talk with somebody, we talk about this all the time. I think it’s a pretty good analogy, is that when you have kids, they go to the pediatrics doctor, they work up to the general practitioner, but as you get older, you get to my age at 61. Now, I had a stent put in my heart. I obviously was seeing the cardiologist, right?
We get a little more specific with our healthcare as we age. It’s the same thing that should happen in the financial world. A lot of times people don’t change. They’ve had somebody they’ve worked with since they were 35, and they’re like, “They’re fantastic,” but they’re not retirement planners.
Here’s my plea to you, Generation Xers, that one of the best times to sit down and talk with somebody about retirement is when you have time on your side. If you’re 10 years out, what a great time. Think how good your plan can be by the time you actually pull the plug on retirement.
Maybe you’re 55 or 56 going, “Well, I want to retire at 60.” That means you’re down to five years or less yet. The idea is get to talking with somebody that actually works in the retirement world that can help you in this area of planning. That’s Victor and the team of Palante Wealth. 856‑506‑8300. Great time to start is right now, 856‑506‑8300.
There’s no cost for this, and, of course, Medina Law Group, Palante Wealth serve the Pennington, the Greater Mercer County area, as well as Bucks County. Victor has clients in New Jersey and in Pennsylvania.
They’re here to help. They don’t know if they can help you, though, until you give them a call. 856‑506‑8300.
What would you say to, let’s say, the mid‑50 Generation Xers or the 50‑year‑olds, because now we’re in our 50s, and now we are maybe starting to think about retirement. What would your advice be to that age group of Generation X?
Victor: I think there’s two things that we would have them focus on. The first is as you cross into the magical over‑50 years off of it, you get to be able to save a little bit of extra money. You have some catch‑up contributions you can make.
You really want to make a good assessment on the distance you need to cover between where you are right now, and what you’re going to need in retirement.
In fact, that’s one of the best things that we can help people figure out. If you’re in a position not knowing what your number is or what your number could be based on some savings that you can do and some projections off of that, we can help you answer that question.
We can help you get into a position where you understand what steps you need to take between right now and when you eventually want to retire.
The first things you have expanded options, because as you turn over 50 you can make some catch‑up contributions. By the way, you probably want some smart advice on how to handle taxes off of that. Sometimes that means not always putting it into an IRA, but thinking about other kinds of savings that you want to do.
Some of the best products that are available to help you with your planning take time in order for them to reach their fullest potential for you and your retirement plan.
If you start that in the 50s, which by the way, often means that you are younger, more insurable, healthier. All of those things are in place. If you start while you’re at that point in time, you probably have a better menu of options that are available for you. That’s probably another element of what people in the mid‑50s ought to be thinking about.
The other thing I would have people be focus on with these next 10 to 15 years is really get a sharp pencil on what their budget is going to look like in retirement. I think what has happened for a lot of people in their 50s is they’ve just gotten off completing any college funding for their kids.
All of this money that has been plowed out the door, and they have been chasing those dollars to just service all the needs they have. Very few people have this incredible savings rate, but now that we’ve ended that, it’s often a marker when you’re at that point where you put that last kid through or stopped contributing to this last child for whatever their living expenses are.
You fully launched them. You have to make sure that you don’t take up the space of those dollars with spending on your own. One of the most instrumental numbers that determine financial success in retirement is your savings rate. I want to make sure that I’m clear about that. It’s not about the balance that you start with in retirement.
They have tons of research around this. It’s not whether you have a million dollars versus two million dollars or whatever else. It’s really what you’re savings rate was relative to your income.
The reason why that becomes important is that as you get into retirement, your habits around money, saving, making sure that you’re within a budget, and understanding what that is, the longer you can make that money last in retirement. The closer you get to not living and spending on everything that you’re making, the better chance that you have.
In these last 10 to 15 years, where you finally cleared the hurdle a little bit, and you’ve got this extra dollars. Getting into the habit of understanding what that budget needs to look like and spending the next 10 to 15 years really understanding that.
Getting a clear picture of what that’s going to look like when you actually stop getting a paycheck in and you have to manufacture your own.
That’s definitely what you should be doing with these 10, 15 years, because the clearer you can get on that and the better you can get your savings rate for those purposes, the more you’ll be able to live really wonderfully as you get into retirement.
Mark: All right. Let’s talk about the other part of that Generation X. Generation X born 1965 to 1980, meaning the youngest are 40, turning 41 this year. The oldest are 55, turning 56 this year. That was your advice to the 50‑something Generation X.
What about the 40‑somethings? They might be right in the midst of raising a family and doing all of that, and their hair’s on fire. Is it too early to start thinking about retirement?
Victor: I don’t think it’s too early to start thinking about retirement. If we want to go back to your analogy from before, I think people know that they have to consider something like a heart condition that was in their family. Their parents waited too long to take care of their own health.
They might be actually seeing the cardiologist much earlier than when the actual need comes. This would be the same sort of smart planning.
I think one of the things that’s really more present for the folks that are in their 40s is a stress and a lack of potential Social Security benefits what they got on. If you start looking at the way the trust fund’s been funded in Social Security, we’ve got people that are already on it, and people coming into it that are really, totally fully funded.
In order to make this thing last, especially, when we start thinking about the way that we’re going to have to pay for all of the tax credits that were given as part of the pandemic, you’re going to see that one of the avenues that they routinely use is to make sure that Social Security as a concept lasts, but they don’t have to run bankrupt or anything like that, is they start extending the age before you can start to claim it.
People in the 40s, like me, are going to be the first generation, because we don’t vote as often as the older people, or the voting block, or they’re not going to come up and raise their arms and start rioting. Those folks are us, I suppose, in this mid‑40s, are going to probably have a lower overall Social Security benefit relative to our contributions, but also probably a longer start time.
All of what that means is, we’ve got to self‑insure our retirement. We have to go ahead and be our own savings bank, we’re not relying on Social Security to generate the income.
If it’s a number that’s going to come to us and maybe a smaller number starting later than we expect it, which means we have this time, the time that it’s in between your 40s and when you reach your 60s, to go ahead and compensate for that by what we’re setting aside to create our own retirement income in there and not be relying on Social Security.
I really stress that for a lot of folks, just because the numbers are pretty clear about where the stressors are, to make this thing happen. You realize there’s only a couple of levers that they can move. They can lower the overall benefit, and they can extend the age, and that’s going to be one of those…They’re going to use one or both of those mechanisms in order to get this thing to continue.
They’ve already done it, though, Mark. I’m not releasing new information about a strategy. This is exactly what they’ve done every time they face a challenge like this. We’re just going to have to see it one more time.
Mark: Now, you think about all these moving parts. You think about it. You think of Victor’s company, Medina Law Group, helping you with your estate planning. You think, “Well, I don’t really need Victor’s company until I’m probably in my 80s because that’s when I need to worry about that.” What if you have a health issue before that?
We don’t know what tomorrow holds. The idea is, we don’t want to be reactive because something happened. We want to be proactive. This is a great opportunity especially for Generation X because you do have a little bit of time on your hands, probably for most of you. We’re seeing more and more people retire younger all the time.
It’s time to start doing something about it. You’re not necessarily putting the plan lock, stock and barrel in place if you’re 45. You’re getting an idea of where you are. Maybe, “Hey, I’ve got 15, 20 years to put myself in a better position.” What a great opportunity for you. I would doubt if you understand all the moving parts of retirement.
Victor and his teams do because they do this day in and day out. What a great idea to get a head start. If you’re in your mid‑50s, it’s really time to start getting serious about this planning part of retirement. 856‑506‑8300 is the number. The team is here to help. They would love to help and answer any questions or concerns that you might have. 856‑506‑8300.
No cost, no obligation, no pressure. 856‑506‑8300. We’re talking to Generation X today on the program, but if you’re already in that baby boomer generation and your retirement’s even closer, there’s going to be some good advice for you as well when we come back. This is Make It Last with Victor Medina.
Mark: Welcome back to Make it Last with Victor Medina of Medina Law Group and Palante Wealth. Those teams are here to help you with any retirement questions or legal questions when it comes to your estate that you have because the teams can help you come up with an income strategy.
Got to replace those paychecks that are no longer coming in when you get into retirement. Where’s your income coming from? Investments. Will your strategies change the older you get? Everybody’s situation is different. We always focus on that.
Taxes. We know there’s tax changes coming. What’s your plan for that? Estate. We know there’s maybe some possible estate tax planning changes. There’s a lot of moving parts. The teams here to help. It’s 856‑506‑8300, if you have any questions. 856‑506‑8300.
Today, we’re talking about Generation X, born 1965 to 1980, which means the youngest are 40, turning 41 this year, the oldest are 55 turning 56 in 2021. There’s already some 56‑year‑old Generation Xers. Victor’s a part of that group.
You think about this, we’ve talked about this, I think some, when we talked about the baby boomer generation. Some of the challenges to that generation for retirement was being part of the sandwich generation. I’m thinking that’s going to be a factor for Generation X as well.
Can you explain what is the sandwich generation? Do you have clients you have to help in that situation?
Victor: Yeah, sure. So sandwich, right? The sandwich usually has got the meat in the middle and two pieces of bread on either side. What we have is our clients being the meat with bread on either side of their sandwich between their parents and their kids.
Most notably, what they’re sandwiched doing is actually helping with their care. They get in a position where they’re still raising their kids, but because their parents are also getting older, they now have to have been responsible for their care to managing their finances, managing what the care they need.
That sandwich generation was first introduced as a concept when we were having people, the baby boomers deal with the World War II, the greatest generation and their parents going in. What’s different now though, and it’s more interesting to a planner, I suppose, is the options for planning around how to care for an older parent are starting to shrink.
Because all the rules that were in place that allowed us to really take care and protect our assets are getting smaller, and smaller and smaller. There’s all kinds of outside pressures for that, Mark. We’re seeing long‑term care insurance companies stop offering personal policies.
We’re watching people who were able to qualify for Medicaid if they ran out of money. We’re watching those rules change. When Gen Xers are in a position where they going to need to care for their parents, we see that there’s a lot of advantages to having taken care of planning ahead of time.
One of the reasons why we’re seeing this more and more exactly right now is the incidence of Alzheimer’s is actually increasing at an alarming rate. A true Alzheimer’s ‑‑ because everyone talks about dementia as being Alzheimer’s ‑‑ but Alzheimer’s is a very specific diagnosis. It’s actually starting younger and younger.
Alzheimer’s as a dementia‑related condition is that time where we start to see people in their mid to late 60s and beginning 70s really have this cognitive decline. Guess what? That’s exactly where our baby boomers are. We started this changeover to age 65, a number of years ago.
We have those people already turning into their 70s and they’re into their mid‑70s going forward. We do have the people exactly where they would start to first have these cognitive issues.
What’s important for people who are in that sandwich generation where they’re taking care of parents, like if you’re in a position where you’ve had a parent be diagnosed with Alzheimer’s or dementia‑related condition or they’ve got Parkinson’s or something like that, Mark…
What’s important for folks like that, if you’re in that position, is that there are things that you can do to help protect their assets, save the home, and do things to make sure you’re managing their care, especially providing a great quality life for the other spouse, the one that’s healthy.
You have to get in front of it. One of the things that we do is we actually offer a guide for people to download to understand how to protect people’s wealth off of it. We’ve actually created a special website for that, that you can go to.
If you go to 920elderlaw.com, that’s 9‑2‑0, elderlaw.com, you’ll be able to download this free guide that’ll help you understand how to make sure that your health changes don’t destroy your family’s wealth.
It is especially helpful, people in the sandwich generation, you can download it for your parents or you can just tell them that they need to download it. If you download that guide, it will help you understand what you need to start to do to help protect assets, and increase your choices to maintain quality of life as you get older.
Mark: That is 920elderlaw.com. There’s no cost for this you just download it, there you go, you got the information. 920elderlaw.com. Glad you’re here with us today for Make It Last with Victor Medina, I’m Mark Elliot.
We’re talking about Generation X and you bring up healthcare. I think a lot of people think, “Well, you know, Victor, once I get to 65, I don’t have to worry about my healthcare anymore because I got Medicare.”
Medicare basically looks at it, “If you’re going to get better, we’ll probably help you. If you’re not going to get better, we’re out.” I think when it comes to long‑term care, Medicare is not going to be a part of that which is where your Medicaid comes in. Talk about the healthcare part of this.
For Generation X, I think it’s hard. I remember being 20, in college and thinking, “I’m never going to hit the age of 60,” and here I am 61 going, “How did that happen?” When we’re in our 40s and 50s, we’re in really good health and we can’t wait for things that are coming, our family is growing and going and doing, and all of those kind of things.
It’s hard to think about healthcare issues down the road. You said earlier, what a great time to plan is when you are in good health. If you want insurance to help, it’s a great time to get it. Talk a little bit about some of the challenges of healthcare in retirement.
It’s probably number one reason ‑‑ probably that working families, but retired couples have to file for bankruptcy is they had a major healthcare incident, and didn’t have any coverage for it.
Victor: Isn’t it sad, the travesty there was something like that that devastated their plan. Something that was completely uncontrolled by them. They didn’t know that they were going to have healthcare event. They certainly didn’t plan for it.
By the way, there was probably not a lot they could’ve done to avoid something catastrophic like that. That caused them, to need to either devastates their entire life savings paying for this, or actually declare bankruptcy, I think it’s really quite sad when that happens.
What people can do if they’re already younger, so if you’re in the Generation X, and you understand this is something that I need to control for on my own. You can actually take advantage of your current healthy state right now, your good health, by looking at the insurance solutions for things like long term care insurance, and being able to apply for policies like that.
Now, this can be a very confusing world, because you’ve got policies where you pay into. If something happens, great they have coverage, but if nothing happens, you’ve kind of thrown all that money away. You also have other kinds of policies that will pay you back if you don’t use that policy.
What’s important is for you to get fitted with the right one. Every person’s going to have a different solution. You’re going to have something that’s very specific to you, but they all depend on you being healthy enough to qualify for it because insurance companies don’t want to write policies on people that are already sick. The sooner you can do that, the better it can turn out to be.
We were talking before about people in their 50s, having done paying for their kids. What are they going to do with this extra money? One of the things they can do is kind of fully fund a long‑term care insurance policy that when they’re done paying that, let’s say over 5 or 10 years, they don’t have to ever pay for it.
Again, it stays there for them as a resource, and if they never use it, they either leave it behind as life insurance to be left for their kids, or it’s something that they can draw on in retirement, the bulk of that money back. Lot of great solutions for that, but the sooner you get started with it while you’re still healthy, the more likely we can get something like that in place for you.
I think the other element of it in terms of healthcare is that, if we watch these Medicare elections that are going in there, we got to realize that the A, B and D are just the base level plans, going to the doctors, going to the hospital, paying for prescriptions. Anything else that’s going to be outside of that is usually some form of a Medicare supplements.
Now we offer the ability for people to shop their Medicare supplements and recommend the right policies for them. That’s usually something for people who are already on Medicare between October and December, that we’re doing that in the open enrollment period.
What’s important for people in their 40s is, if you’re in the Generation X right now, you’ve got to realize that those plans have been changing, and the costs and the contributions for that keep getting modified.
What you need to do is, start to budget for the amount that you have to pay for your additional health insurance. For the things that are covering what Medicare isn’t covering on that basic level.
Mark: At the end of the day, it seems to me that the things are always changing. There’s always new tools that pop up in the investment world. There’s new tools in the insurance world. Things and policies, they’re always changing, because of what’s going and in the world.
I mean, we get it. Companies that create those kind of tools, they’re also in the business of making money, but they’re also going, “Well, people need some help in this area. Let’s create this tool.” That’s seems to me to be part of your job is really to help educate us a little bit, if you will, like your parents being teachers.
You have to educate us. Then, you give us the options more than you telling us, “Hey, Mark, you have to do this. You have to do that.” “No, here’s some options. Maybe this would be a great way for you to go.” At the end of the day, it’s your client’s final decision, I would imagine.
Victor: There’s one other layer to that. It’s not only, here are some options for you to go. Understand that, as an independent and fiduciary advisor, the options that we’re providing for you are things that are in your best interest. They’re independent, meaning, there’s nobody driving our recommendations except what we can go.
It’s like not going to one car dealership where you’re only getting that brand of car. Understand that you’ve gone to a broker, be like, “Look, we can choose from anything that’s out there”
“What do you need? Do you need a truck? Do you need a car? What is it going to help you get to where you need to?” Then, we can make the recommendation for the best one for you, regardless of the specific company that’s offering it.
That independence and that fiduciary obligation layered with this idea that we’re presenting options for people because we can know the entire marketplace of what’s available, be able to help people narrow their decisions, and then it’s ultimately theirs. It’s those two things together, Mark that make working with somebody like us so helpful as they’re planning their retirement.
Mark: For the Generation X, just quickly, what would you say would be the best time to come in, sit down, and talk with you? Is it 40? Is it at 45? Is it 50, or is it whenever retirement questions start popping up in our mind, and we see the retirement on the horizon?
Victor: Yeah, I guess the most self‑serving answers, like the moment you come out with any money, you come and see us. I think that if you pushed me on giving you an age, I think once we get to age 50, that’s a great time to begin that conversation.
We start to open up the world of additional things like catchup contributions towards retirement, you get a good understanding, you’re mostly done with the most expensive parts of raising kids, maybe most of them are through college. We can now see retirement on the horizon a little bit more clearly.
Now, we can make sure that…We were talking about this before, about making sure that we’re on the right direction. You might think about it like you’re driving this big, huge aircraft carrier. We don’t want to be hundreds of miles off course, because we didn’t stop and realize where we were in the direction that we need to be taking.
Even minor adjustments at age 50, are going to lead you much better in a place that you should be when you’re looking at final retirement like age 65 or 70. I would say that probably, that’s the best, earliest time if we were looking for a particular number or age.
Mark: Absolutely. If you’d like to chat with the teams at Medina Law Group, at Palante Wealth, find out where you are on your road to retirement, a great time to do it would be right now. 856‑506‑300. There’s no cost. There’s no obligation. There’s no pressure. The team is here to help. They would love to help. 856‑506‑8300.
Actually, for Gen Xers, it’s a great opportunity because you’re way ahead of the game. That’s a positive. 856‑506‑8300. Glad you’re with us today for Make It Last with Victor Medina of Medina Law Group and Palante Wealth. We’re headed to our final segment right after this. Stay with us.
Mark: Welcome back to Make It Last with Victor Medina of the Medina Law Group, and of course, of Palante Wealth. The Medina Law Group is here to help with your estate planning. Certified elder law attorney, Victor is as well. They can help you in all of those areas.
Palante Wealth is here to help you with your holistic retirement planning, longevity, taxes, health care, investments, income. How do you handle that? How much income do you need? How much can you replace with the guaranteed stuff like Social Security and pensions?
Most of us don’t have a pension, where’s our income going to come, so we can retire, and retire the way we want to?
What about our investments? Do our investment strategies need to change when we get into retirement? Maybe, maybe not. Everybody’s situation is different, but that’s a big part of it.
Then, taxes of course. We think taxes are going up. We need to plan for that, not looking back like we do every April, or May, or June. We have pandemics.
Typically, every April 15th, we do our taxes. We have them done by then, and we’re looking back. Our CPA is looking back a year. We’re historians. When it comes to retirement planning, they’re looking forward. What about taxes? Where are you going to be in 5 years, 10 years, 15 years?
That’s using the knowledge that Victor and the teams have put together and the team he’s created. They don’t know exactly where the tax codes are going, they’re not setting those brackets, they’re not setting those laws, but they know we need a plan in place.
If you have questions about any of this, you want to sit down and chat with the team, you certainly can. 856‑506‑8300. If you’d like to find out more about the Medina Law Group, M‑E‑D‑I‑N‑A, medinalawgroup.com. About the planning side of retirement, that’s Palante Wealth, palantewealth.com, P‑A‑L‑A ‑N‑T‑E, palantewealth.com.
All right, we’ve been doing this show now for a while. Victor, we’ve got some mailbag questions. These can come from anywhere back in the day, and we’re getting back to that point where Victor and a team can do seminars, go out and have people come into their business, or they go out and have a dinner.
There are website where you can go to the website and ask a question, you can call the team and ask a question. We’ve taken some questions that we’ve picked up here in the last month or two. I’m going to give you a question. Then, you answer it if you can.
Because this is what happens every week when people come in and sit down with you. They’ve got questions, right?
Victor: Right.
Mark: Good luck. Good luck to you.
Victor: [laughs]
Mark: Our first question comes from Roger in Yardley, PA. “Victor, I’ve had a steady corporate job for 35 years. My wife has taught piano lessons since we were married in the early ’80s. Her job helped us pay for groceries, gave us some extra money to put away for the future, but she does not have a job with a 401k or insurance benefits.
“How can I make sure she will be OK if something happens to me?”
Victor: That’s a good question. Roger, thanks so much for listening. By the way, my heart is where your wife is because I love playing the piano, and I loved receiving piano lessons. I had, I think, probably some form of your wife as I was growing up.
The biggest risk that Roger is facing or Roger, if you’re listening, the biggest risk that you’re facing is that you don’t have any contributions in your wife’s names towards Social Security. She hasn’t been accumulating a Social Security record that she can claim on her own, which makes it hard to count on a number.
We’ve got some good news for you in that world, which is actually one of the benefits that is included in the Social Security claim is that if you are married, you can claim up to half of what your spouse is getting as your own benefit.
Roger, if your benefit looks like it might be $3,000 a month when you retire, your wife can get $1,500 a month just because she’s married to you. That’s a very helpful benefit. The two of you together can be bringing in $4,500 per month as Social Security. This is just hypothetical figures, but you understand where I’m going with that.
There is a benefit for Social Security, even though she hasn’t been contributing towards it, and having a Social Security claim record of her own. That said, there’s also a risk that you have to help manage. One of them is that when one of you dies, specifically, when you die, you’re going to lose some of the Social Security.
We have a slightly good answer here, which is that your wife can actually take your Social Security number as her own number, meaning that she can bring in $3,000 per month, and she can claim that as a survivor’s benefit in Social Security, but she did lose her $1,500. She’s going to have her money go down.
This is where we need to create a plan for you. You need to have a plan of how to make up that extra money. If you were relying on that extra $1,500, we need to have a plan for how we’re going to make that up. That could include the use of life insurance that pays out at your death, that makes up that money.
It can be about segmenting your investments so that we have some part of your investments that are meant to turn on as an income stream after you die, that we’re not using right now. It’s a way of making that up. In some form, we have to make that up.
By the way, also taking into account taxes, because once you die and your wife is left, she’s going to file single. There’s going to be higher tax rates. It is a problem that you have, but it’s not a problem that’s insurmountable.
There are elements that can be helpful about this ability to claim half the Social Security, and there are elements that you need to put a plan in place in order to help protect against a future that we can see coming, which is that you might die before she does, and how will that affect your planning? How will that affect her ability to have a good quality of life?
It’s a good question. There is a solution, but you do have to get planning started in order to be able to do that.
Mark: That’s, Roger, all you have to do is call the team. Victor and the team are here to help. 856‑506‑8300. No cost for this again, no obligation, no pressure. 856‑506‑8300.
Next question, Victor, comes from Sharon in Flemington. “Victor, my husband and I just started getting serious about preparing for retirement. We started going through all of our monthly expenses. It was really eye‑opening. I had no idea where it was all going each month. What should we do now?”
Victor: Thanks also, Sharon, for being a listener. It’s funny. Where we never know what’s going out the door. I feel like this is the time in history where we are going to get monthly‑billed to death. There’s always some service, everyone wants to charge us some monthly amount. There’s an app that will help you go through and eliminate some of these.
Let’s just say for a moment, Sharon, that most of these expenses are the valid ones. You are going to want to, first, make an assessment, which of these do you need in retirement or do you want to continue, and which of these can we let go.
Sometimes we’ve had this bloat happen where because we can afford it, we’re spending it, but it’s not something that’s necessary. One of the most telling signals to success in retirement is your savings rate. No matter what you’re making.
It is not about the balance that you have in retirement, by the way. There’s been lots of research in this area. It’s not about the balance that you have, how much you have saved in retirement, but it is about your savings rate.
If you’re a family that is actually saving at least 15 percent of what it is that you’re making, your odds of being successful in retirement go way, way up, just because you’re used to living on less.
As you and your husband start to think about how you’re going to navigate retirement, one of things you can do is move to a higher savings rate by getting rid of some of these, and making some decisions about what needs to be there in retirement, and what can stay.
When I say needs, there are also some parts of your retirement that is about you enjoying it. We want to break down these expenses into two different buckets ‑‑ as “necessary” and “it would be nice to have” ‑‑ or what we call discretionary expenses.
The necessary expenses are going to be ones that we have to meet come hell or high water, which means that we’re going to have to create a plan where we have had some guarantees around bringing that money in.
That might be using a form of Social Security, it might be using a pension, if you got one, it might be allocating some of your investments towards a guarantee of income and allocating it towards that necessary bucket.
The reason why we want to do that is we want your necessary expenses to be things that are absolutely rock solid in retirement. It won’t matter how long you live, or what happens to you, you will be able to meet those necessary expenses with guarantees.
When it comes to the discretionary bucket, one of the things that we can do is look at your investments, and look at how much you have saved, and try to figure out how we can meet those discretions. We want you to have a great retirement, you want to have a great retirement.
We’ve got to do an analysis to try to figure out can you meet those discretionary expenses, for how long, and how safely from that. We’re lucky. We mostly work with people that have got reasonable expectations for their budgeting in retirement and Sharon, you might fall into that bucket.
We don’t know what numbers you’re working with right now, but it may turn out that your situation looks like one where it would be successful.
Here’s where we actually have to dive into the specifics of your planning to get that answer. This is one of those areas where you have to come in, we have to look at your investments, we have to look at what you have, we have to look at your expectations, and start to perform an analysis around whether or not you’re going to be successful.
We call that the “Make It Last checkup plan”, which is where we look at your income, investments, taxes, and estate planning, and give you an assessment of what’s in good order, look at what needs addressing, some of the areas where it might not be in such good order, and then give you our recommendations about how to fix that.
We do that for people at no cost. What happens is, if you want us to implement that, then we become your advisors, and we can go and do that. We just kind of take that next step afterwards. The evaluation actually comes at no cost and no obligation whatsoever.
If you’re interested in doing that, Sharon, it would be a good time to start that conversation because you’ve done some of the work already by looking at your budgeting. Now you just need the other half of where our expertise can come in by telling you the answers about whether or not you can be successful.
Mark: 856‑506‑8300. Sharon, an easy thing to do. Just pick up the phone, no cost for this 856‑506‑8300. All right, I’m going to give you another question you’ve got less than a minute.
Victor: All right.
Mark: Good luck. All right?
Victor: OK.
Mark: This comes from John in Newton, PA. “Victor, I’m single and I’m planning a relatively simple, quiet retirement. I’ve done most of the traveling that I wanted to do, and I only have one or two places I’d like to see someday. If I don’t have anything big planned, is there that much I should do for retirement plan?” I gave you an easy one, because he said, “There’s not much to do.”
Victor: Of course, everybody thinks that their situations easy. You give me the one that looks like the easiest for the lightning round, but it’s not. Look, John, there are a couple of things that you have to take into consideration in your planning, even as a single person. This falls into the estate‑planning world that is related to the retirement.
Here’s what I mean by it. You need to create a plan that helps you in case you become disabled, or if you get sick in the future. No one’s planning on that, but because it’s just you, and because you’re just relying on yourself.
You need to think about who’s going to be your power of attorney agent, who’s going to help you make health care decisions, and if you need an assisted living facility because you can’t stay home with a spouse that’s going to be providing care for you. How are you going to get that care? How are you going to afford that care?
As you can see, in just about 30 seconds, we outline at least three major reasons why you still need a plan, John, even though you’ve got a very simple situation of just being a single individual, and not looking to do too much.
There are a few things that might be coming in the future that could knock you off of your intended plan. We need to have a way to navigate that if we have those situations come up. That’s where your planning comes in. It’s still important, even for single people that don’t want to travel. How did I do?
Mark: You did good. John, the number, 856‑506‑8300. We appreciate the questions, we appreciate you listening to Make It Last with Victor Medina of the Medina Law Group and Palante Wealth.
Again, if you need some help, you’re not sure where you stand when it comes to your retirement or your estate planning, hey, the teams are here to help. The number 856‑506‑8300. Appreciate you being with us today for Make It Last with Victor, we’ll be back next week so have a great week everybody. We’re back with more next week right here on Make It Last with Victor Medina.
[background music]
Woman: Taxes are just a fact of life. You can’t avoid it even in retirement, but what if I told you there are ways to minimize what you pay in taxes? Victor Medina and his team can help. To learn more, visit 920taxes.com to get your free copy of Victor Medina’s tax guide 920taxes.com. That’s the numbers 9‑2‑0, taxes.com.
Mark: Palante Wealth Advisors are an independent financial services firm that utilizes a variety of investment and insurance products. Medina Law Group is an independent estate planning and elder law firm. Investment advisory services offered through Palante Wealth Advisors, LLC, a New Jersey and Pennsylvania registered investment advisor.
Registration does not imply a certain level of skill or training. Investing involves risk including the potential loss of principal. Any references to protection, safety or lifetime income generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims paying ability of the issuing carrier.
This radio show is intended for informational purposes only. It is not intended to be used as a sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual situation.
Medina Law Group and Palante Wealth Advisors are not permitted to offer and no statement made during the show shall constitute tax or legal advice. Our firm is not affiliated with or endorsed by the US government or any governmental agency.
The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Medina Law Group and Palante Wealth Advisors.
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